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Cross State Sales will Break Health Insurance Just Like it Broke Credit Cards

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When the new Republican congress starts talking about allowing people to buy health insurance across state lines keep in mind what this same reform did to the consumer credit industry. The republican advocates of this reform say it would give customers better deals because more companies would compete over their business, but in reality states would compete over insurance companies in a race to see which would regulate them and protect their customers the least.

The supreme court has set precedent that in cross state transactions the only state that can regulate the transaction is the state the seller is located in. This creates a strong incentive for insurers to all move to the state that regulates them the very least. Credit card companies started relocating within a matter of days of this reform in their industry during the late 70s. With credit cards it certainly did not result in better deals for customers; it resulted in higher interest rates; more tricks, traps, and fees; and a general rise in the exploitation of their customers.

This kind of exploitation is already the norm in the health insurance industry. If all insurers could relocate to the state with the least regulations, then states would lose the ability to regulate the sale of insurance in their state. With health insurance it would not be people's credit rating or finances that get screwed, but their health and their lives. States will be unable to protect their citizen's interests. Ironically, this Republican policy would force the Federal Government to regulate the insurance markets even more tightly since the states would be powerless to step in.

 

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If you're concerned about the GOP's plan for healt... by John Retherford on Wednesday, Jan 12, 2011 at 4:35:17 PM
I saw something like that happening already, but y... by Scott Baker on Thursday, Jan 13, 2011 at 4:10:12 AM